The Market’s Recent Bullish Turn was Led by the Nasdaq

The DOW, S&P and Nasdaq Composite all turned bullish in the last two weeks. The first bullish signal was the May 20 and May 21 two-day bullish turnaround. The second bullish signal was price rising above the previous high made on May 13. But the Dow did not achieve this. Perhaps this was because of its gain in the first part of May when investors were buying the Dow as a defensive move. Since the market turned bullish, some of these positions have been unwound.

Our Stock-Sectors’ Relative Strength Table (see below) shows the Technology Group powering the market ahead. Within it was big upward moves by the Software and Technology Hardware Sectors and, to a lessor extent, the Semiconductors Sector. The Cyclicals Group’s growth was held back by big losses in the Basic Materials, and Machines Sectors. The fall in Basic Materials is the most recent part of a roughly two-year fall and suggests our economy is experiencing deflation. The weakness in these two sectors was countered by big gains in the Leisure and Transportation sectors.

Here’s the relative strength chart of the Basic Materials sector:basic_materials

 

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